The biggest perk on purchasing a newly constructed home is the opportunity to acquire most upgrades at turnkey with negligible waste. Nearly all home builders offer value added packages that allows the homeowner to choose additional/upgrade options for a fixed cost. The snag though is that a first time home buyer may not be savvy enough to recognize the right upgrades that are the selling points of a house. As a first time home buyer, the tendency is to make a beeline for the standard setup in their attempt to buy the biggest plan affordable. There are many negatives to this approach:
Choosing from the upgrades offered by the builder is almost always cost-efficient compared to improving after handover – improvements after the house is tendered essentially translates to
Other problems with this approach include:
On our part, we became a first time home buyer when we purchased a new home in Alameda in 2003. It had about 30K worth of upgrades. We realized almost immediately our upgrades were conservative at best: we should have added recessed lighting throughout, upgraded the stairways and the upstairs carpet to name a few. Ultimately, we decided to largely live with what we got, except for doing the yard and window dressings. When the house was in the market in early 2004, a similar house with nary an upgrade was also listed – we were pleased when our house sold first at a significant premium over the other house, thereby justifying the value of the upgrades.
Not everyone is on the quest for a brand new home and the condition of the houses generally reflects the market sentiment. In a buyer’s market, the owners usually do a makeover for the listing to standout and attract the interest of the buyer. In a seller’s market, seller motivation is non-existent and the houses sorely reflect that. Even homes cited as “ready-to-move-in” might require significant time and effort before it becomes “livable”, as personal tastes are unique and can be all over the map. Our next article will look into home improvement options.
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Choosing from the upgrades offered by the builder is almost always cost-efficient compared to improving after handover – improvements after the house is tendered essentially translates to- Junking the standard offering thereby losing the entire value of the item,
- Scoping the work involved,
- Ironing out the permits required if any,
- Labor costs associated with dismantling, cleanup, and re-installation,
- Increasing carbon footprint.
- Having to finance the improvement. When you choose upgrades from the builder, the cost gets added to your mortgage transparently - this is a boon for many a cash strapped first time home buyer.
- Personnel inside the house for a prolonged period of time.
- Dust is a given and could be a deterrent for those with health problems.
- Renting while upgrading is a significant additional cost.
- Some options such as adding recessed lighting where crawl space is limited could prove prohibitively expensive after handover as significant labor is involved to work around the limitations.
- Even for peripheral items such as the garage, yard, and window furnishings going with the builder option if at all possible is recommended.
On our part, we became a first time home buyer when we purchased a new home in Alameda in 2003. It had about 30K worth of upgrades. We realized almost immediately our upgrades were conservative at best: we should have added recessed lighting throughout, upgraded the stairways and the upstairs carpet to name a few. Ultimately, we decided to largely live with what we got, except for doing the yard and window dressings. When the house was in the market in early 2004, a similar house with nary an upgrade was also listed – we were pleased when our house sold first at a significant premium over the other house, thereby justifying the value of the upgrades.
Not everyone is on the quest for a brand new home and the condition of the houses generally reflects the market sentiment. In a buyer’s market, the owners usually do a makeover for the listing to standout and attract the interest of the buyer. In a seller’s market, seller motivation is non-existent and the houses sorely reflect that. Even homes cited as “ready-to-move-in” might require significant time and effort before it becomes “livable”, as personal tastes are unique and can be all over the map. Our next article will look into home improvement options.
Related Posts:
- First Time Home Buyer - Builder Upgrades vs Upgrading on Your Own - An Analysis.
- Home Improvement - Our Experience.
- Mortgage Refinancing - Our Experience.
- Home Maintenance Schedule - A Primer with a Focus on Costs.
- Flipping Houses in the Bay Area - An Experience.
- Bay Area Home Buying - A Bubble Period Experience.
- Home Ownership Experience in the Bay Area - Lessons Learned.
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